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MySpace cuts 500 employees

CEO Mike Jones says the cuts are necessary for growth and profitability

Financial trends and news by Faith Merino
January 11, 2011 | Comments
Short URL: http://vator.tv/n/15d2

It looks like today is a day of rumor confirmation.  First Verizon reveals the long-awaited Verizon iPhone, and now MySpace—on a less upbeat note—confirmed that it is laying off 500 employees—half of its staff.  The company made the announcement Tuesday, while everyone was waiting on the edge of their seats to hear what Verizon was announcing.

“Today’s tough but necessary changes were taken in order to provide the company with a clear path for sustained growth and profitability,” said MySpace CEO Mike Jones.  “These changes were purely driven by issues related to our legacy business, and in no way reflect the performance of the new product.  The new organizational structure will enable us to move more nimbly, develop products more quickly, and attain more flexibility on the financial side.  We are also committed to rebuilding the company with an entrepreneurial culture and an emphasis on technical innovation.”

Jones notes that the news isn’t all bad.  “Since the worldwide rollout of the new Myspace, there have been more than 3.3 million new Profiles created.  We also introduced Topic Pages, which connect users to entertainment-focused content from news sites and blogs all over the Web. Over 134,000 Topic Pages have been created since the introduction of the new Myspace.”

Last month, Mike Jones took the stage with Robert Scoble at LeWeb, where Scoble described his vision of MySpace as a plane in a tailspin of doom.  In a particularly uncomfortable moment, Scoble asked the audience to raise their hands if they had even seen the latest version of MySpace, and notably only a smattering of people—arguably less than 10% of the audience—raised their hands.  But Jones remained optimistic and maintained that MySpace will turn itself around as an entertainment hub rather than a social network in itself. 

The company unveiled the new MySpace design some three months ago, and while Jones boasts of 10 million “social actions” and 90 million “follows” within the Hubs and Topics categories, he doesn’t mention that traffic has dropped steeply in the last few months

Recently, it suddenly became apparent to me just how imminent MySpace’s demise actually is when a friend of mine and I were making fun of a guy we know for the stupid faces he makes when talking, his lame diamond stud earring, and the fact that he has a MySpace page instead of a Facebook page (note: he’s not a musician or entertainment buff, he’s just lame).  But that lameness comes down to the fact that the guy uses MySpace exclusively for social networking, and MySpace flew that coop a long time go.

I do believe that MySpace can turn this tailspin around—part of the problem is that I keep thinking of the social titan that MySpace used to be, rather than what it is now: an entertainment site—and a decent one at that.  It’s kind of like…when you eat a tofu burger.  If you expect it to taste like meat, you’re going to be disappointed, but if you expect it to taste like a soy-based meat alternative, it’s great. It will never reach Facebook proportions, but even with a huge staff cut, it will likely settle into a comfortable niche.

Image source: MySpace.com


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